Cooperative Game for Carbon Obligation Allocation Among Distribution System Operators to Incentivize the Proliferation of Renewable Energy

The inclusion of electricity consumption in carbon abatement policies can further exploit the carbon reduction potentials in power system operations. In this paper, we propose a strategy for the allocation of carbon obligation as penalties among distribution system operators (DSOs) to incentivize the proliferation of renewable energy. The proposed strategy considers the fairness of the carbon obligation allocation and ensures that DSOs located closer to carbon emitting units would be allocated higher carbon obligations. The interactions among DSOs using the cooperative game theory and the impact of power network topology are comprehensively analyzed in order to properly measure each DSO’s contribution to the system carbon obligation. The allocated carbon obligations as cost penalties would incentivize DSOs to accommodate additional renewable generation to reduce the DSO’s operation cost. Thus, the proposed allocation strategy provides a technical ground for reducing carbon emissions by dispatching the additional renewable generation and reducing high carbon emission generation. In this paper, Shapley value, Aumann–Shapley rule, and prenucleolus strategies are utilized as three alternatives to allocate carbon obligations among DSOs. Two additional strategies, which are based on existing bus carbon intensity assessments, are also revisited and compared. Relevant allocation problem constraints are presented for evaluating the merits of the proposed strategies. Two case studies are analyzed to highlight the performance of the proposed Shapley value-based strategy in terms of fairness and compatibility for accommodating the additional renewable energy and reducing carbon emissions in power systems.